Today, outsourcing is no longer an alien concept to the business. It is convenient, profitable and doesn’t take long to pay off. Large companies delegate part of their functional capabilities to the affiliated enterprises without hesitation to achieve optimal results.
A company purchasing services from an outsourcing party aims to meet specific objectives. These encompass — service quality enhancement, reputation boost, general customer satisfaction, expenses optimization and also marketing communications adjustment.
Modern outsourcing firms provide their clients with a complete range of services for wholesome control over the results achieving process using systems regulation and customer expectations fulfillment stages. The efficient management of the functions given for outsourcing is the key element for goal attainment here. Thus, an enterprise looking for the right solution for services management should decide on the one that is capable of the qualitative realization of the established objectives.
Treaty preparation is one of the most important aspects of the whole outsourcing process. A client company wants to be confident that the SLA (service level agreement) is arranged according to the requirements and clearly states all the payments and productivity standards.
Incorporating punitive damages for unsatisfactory performance regulations into a contract can be one of the most effective methods for ensuring the desired quality of services provided by an outsourcing company.
What is the Service Level Agreement
SLA or Service Level Agreement is a document stating the rights and duties of an outsourcing-company and client. For example, the service level agreement call center lists the quality of calls processing services provided by an outsourcing company. The agreement is signed by both contractor and client with an indication of mutual responsibilities. A document normally contains information such as:
- A detailed list of services provided;
- Parties signing a service level agreement;
- Submission periods of particular services (deadlines) and expiration dates;
- A number of employees working on a project with the provision of all the machinery that is going to be used for work implementation;
- The format and accurate time of provision of the regular and emergency reports in case of machinery malfunctioning and other unforeseen contingencies;
- Established normative for the quality level of the services provided, calculations methodology and the format of the offered reports on the quality of the services provided;
- Services price and the payment method (partial or complete payment);
- Resolution procedures for conflict situations that may spring up during the performance of the services or at the end of the collaboration.
Call Center Service Level Agreement Sample
This Service-Level Agreement (this “Agreement” or this “Service-Level Agreement”), effective as of [Effective date], (“Effective Date”) is made by and between [Client Company”], a company organized and existing in [Client State], with offices located at [Client Address] (“Customer”) and [Supplier Company], a company organized and existing in [Supplier State], with offices located at [Supplier Address] (“Supplier”).
WHEREAS, the Parties have entered into an agreement effective as of [Effective date] (the “Contract”) for the provision by Supplier of the Services (as defined therein) (the “Services”); and
WHEREAS, the Contract states that a service level agreement is a condition precedent to any extended term of the Contract; and
WHEREAS, the customer is willing to continue with the Contract past the original end date solely upon Suppliers acceptance of the terms and conditions of this Agreement, and Supplier confidently accepts the terms and conditions herein;
NOW, THEREFORE, in consideration of the foregoing, and of the terms and conditions and the Service Levels, the Parties hereby agree as follows:
- Rider Agreement
When signed, this Agreement will form a part of the Contract, and upon signing this Agreement, the Contract shall be automatically changed, in accordance with its terms, from a monthly contract to a yearly contract. All capitalized terms not defined herein shall have the meanings ascribed to them in the Contract.
2. Service Levels & Service Credits
The Supplier shall at all times during the term of this Agreement provide the Services to meet or exceed the Service Level Performance Measure for each Service Level Performance Criterion, as defined hereinbelow.
The Supplier acknowledges that any failure to meet a Service Level may have a material adverse impact on the business and operations of the Customer and that it shall entitle the Customer to the rights set out in this Agreement below, including the right to any Service Credits (as defined below).
The Supplier acknowledges and agrees that any Service Credit is a price adjustment reflecting the value of any lost service caused by failure to meet a Service Level. Both Parties agree that the Service Credits are a reasonable method of price adjustment to reflect poor performance.
Other than the Customer’s termination rights as set forth in the Contract, A Service Credit shall be the Customer’s exclusive financial remedy for a failure to meet a Service Level.
3. Performance Monitoring
The Supplier shall implement all measurement and monitoring tools and procedures necessary to measure, monitor and report on the Suppliers performance of the provision of the Services against the applicable Service Levels at a level of detail sufficient to verify compliance with the Service Levels.
The Supplier shall immediately notify the Customer in writing if the level of performance of the Supplier of any element of the provision by it of the Services during the term of the Contract is likely to or fails to meet any Service Level Performance Measure.
The objectives of the Service Levels and Service Credits are to:
- Ensure that the Services are of consistently high quality and meet the requirements of the Customer;
- Provide a mechanism whereby the Customer can attain meaningful recognition of the Suppliers failure to deliver the level of service for which it has contracted to deliver; and
- Incentivise the Supplier to comply with and to expeditiously remedy any failure to comply with the Service Levels.
5. Service Levels
6. Service Credits
Service Credits are required to be paid in the event that the Service Level achieved falls below the Service Level Performance Measure in a Service Period.
The Service Credit is determined by the Service Level achieved, the Service Level Performance Measure and the Service Level Threshold and is calculated by using the straight-line formula below:
Service Credit £ = ((a-x)*c)*d)
where “a” is the Service Level Performance Measure (%) below which Service Credits become payable;
“x” is the Achieved Service Level (%) for a Service Period;
“c” is the Service Credit (%) payable if the Achieved Service Level falls below the Service Level Target, and “d” is the amount payable in respect of the Services during the Service Period.
IN WITNESS WHEREOF, by execution by the parties below, this Service-Level Agreement will form a part of the Contract.
The Importance of Service Level Agreement for Business
Any company ordering certain services to contractors wants work to be done qualitatively. Constant monitoring of the affiliated company's actions requires a lot of time and effort, while doesn't even guarantee that the objectives will be achieved. If an outsourcing company falls behind in terms of productivity while performing the client's functions —it must be not working appropriately. Thus, we can conclude that the SLA is a convenient and quite versatile tool for assessing a business service.
Nowadays, a Service Level Agreement conclusion is not necessary at all and many enterprises even consider signing this type of document useless and burdening due to their own subjective conditions. Though, experts all around the world claim that SLAs provide businesses with substantial competitive advantages.
For instance, an online-shop with toys for children. One and the same toy can most probably be found on a number of different websites with little to no price oscillation at all. So a buyer is likely to make a purchase at the store with the fastest and cheapest delivery. After the purchase was delivered to the buyer and they acknowledge that the condition of the item itself is generally satisfying and it has no defects but for some reason don't find the functionality suitable for their needs — a process of purchase return is to be commenced. This is where all the cards are played and the online-shop that sold the toy should provide its services. Surely, the client is going to be happy if the process won't invoke any conflicts, won't take much time and will be free of charge.
A company that has calculated its every action and stated it in the Service Level Agreement can make a guarantee for the compliance of the procedures on a certain quality level available. And it doesn’t have to be outsourcing in the service providing field only. It is possible for a company to approve an inner document regulating the catering guidelines.
Accepting call center SLA, a company approves the client servicing regulations. All of the company's employees interacting with the clients are obliged to sign SLA. Whether it be a contact-center specialist, an account manager or a sales assistant — all of them must acknowledge SLA customer services accepted by the company and strictly follow the established rules. It seems obvious that these rules should be followed by the relevant personnel and it shouldn't be even mentioned. Still, the Service Level Agreement is useful to set these rules in stone even more and ensure the highest service quality levels possible.
What is Service Level Agreement in BPO?
BPO (Business Process Outsourcing) is a method of increasing work productivity often practiced by enterprises — one company drafts a contract with another one for the performance of certain functions on behalf of the company-initiator for optimization of the working processes. At present day, business-processes outsourcing is a complete form of outsourcing implying not only business interactions but a wholesome collaboration between a client-company and outsourcing-company.
Normal outsourcing has little to no difference with BPO. The main idea is reserved, which is to drop expenses while enhancing the results with the help of an outsourcing company highly competent in the field of business that was entrusted to it. However, BPO is considered to be a more demanding type of outsourcing as it implies a long-term collaboration and often requires more of a substantial initial preparation process.
Many enterprises come to the decision of transferring their functions to an affiliated company not just to lower the expenses but also make it more predictable and gain the ability to have a clear vision of the expenditure volumes for client servicing. And precisely BPO is capable of providing the necessary expenditure level with the help of certain financial conditions. These conditions are stated in the Service Level Agreement.
Signing SLA is a necessary element in the case of BPO, especially when it comes to the companies providing the contact-center services — the statistics have great importance in this field, thus SLA call centers are very thoughtful in regard to the productivity indexes. The executives of these firms are always on the watch for new tips and tricks for client servicing and potential customer communication. They keep track of the indicators of client reactions on different forms of addressing, types of sentences, etc. The statistics are carefully controlled in this sphere of business and are often paid the most attention to when deciding on an outsourcer.
What is Service Level in Call Center
As of today, one of the most popular contract-center field standards is an 80/20 ratio. This means that 80% the incoming calls are answered by a specialist within 20 seconds time period. Though this is not a fundamental principal and the final results depend mostly on the specifics of a particular call as well as some other elements. Thus, the ratio can vary — 90/20, 70/40 or 60/60.
Contact-centers scrupulously calculate their productivity rates after each working day. The final score includes both the overall number of calls and those that were hanging on the line before being answered. Most companies prefer to classify their Service Level in three groups:
- Clients who have hung up having reached the line are fixated on the time of the call cancellation.
- Clients who have hung up after being answered are fixated on the time of the call cancellation too.
- Clients who have hung up not having been answered by an operator are not fixated in the database.
There is also a convenient common formula for determining the Service Level:
Service Level = the number of the accepted calls / overall calls number * 100 and the obtained result to ASA (Average Speed of Answer) or AWT (Average Waiting Time) ratio.
Average Speed of Answer (ASA) is the method of measuring the average speed of answer of a call-center specialist. This indicator includes the overall client’s waiting time on the line before being answered disregarding the time spent of IVR navigation process.
Average Waiting Time (AWT) is the client’s average time of waiting on the line before being answered. This indicator includes only the accepted calls. Cases when clients hang up before being answered and the time they were waiting are not considered.
There are also some other important service level agreement metrics used to determine the level of service in call-centers. For instance, the average time of call acceptation is counted from the moment of establishing the connection between a client and a call-center specialist and until the moment when the operator has downloaded the data on this client in the database after the call is ended.
The term Average Talking Time (ATT) is considered exclusively at the period of time when an operator is on the line with a client, including the call retention periods. After Call Work (ACW) in the amount of work done by a call-center specialist after the end of a conversation with a client. This process describes the common actions on a specific task such as putting the client’s data into the database and switching on the “ready” mode. Average Time to Abandon (ATA) is an indicator of an average time before call declination. It includes the period of time between the moment of making a call and canceling it without having been answered. Interestingly enough, some clients are willing to wait for a long time of the line, while others are giving up during the first minute — but the contact-centers employees have learned to measure peoples’ patience as well as the other indicators.
There are a lot of similar formulas allowing for the collection of statistical data. With their help call-center calculate the rate of success of the completed tasks and general team performance assessment, and also try out different client communication strategies — because if a team signs an official obligational document such as SLA set, it has to comply with the corresponding normative.
A call-center capable of resolving the client’s problem in the very first appeal is definite to enhance the client’s experience with the corresponding company. This, in turn, increases the loyalty of the customer while minimizing the client’s costs. This is one of the reasons for call-centers to be as concerned as possible about the methods of communicating with clients. Although attaining such statistics may be troublesome at times — companies have to keep the data on their clients and constantly control the renewed applications. Besides that, different surveys can be implemented for determining essential statistics:
- Using IVR (Interactive Voice Response) — a client is asked to assess the quality of the services provided after the conversation with an operator.
- Using a telephone interview — the quality of the services provided is evaluated directly by asking a client during the deliberate call. Usually, some time has to pass after the initial conversation in order for the client to form an opinion on the level of service, but no longer than a week so the recollection of a call is still fresh.
At the moment, many companies providing contact-center outsourcing services require new ideas for gaining unique advantages and achieving maximal results in their work. Metrics such as Service Level is useful for the effective recollection of data for further business-processes analysis handed over to client-companies for outsourcing. This information says a lot about the quality of the client servicing and helps to prepare for the subsequent objectives.
Modern business requires constant research of new technologies, working approaches and affiliating enterprises for collaboration. Outsourcing is a convenient and financially advantageous method of interaction in the business environment. As a result, many great players successfully implement outsourcing for manufacturing expenditure optimization. Also, every company wants to be confident in the quality of the services it is being provided with. It is hard to deny the benefits of signing the Service Level Agreement on both parties — a client-company has a clear vision of the quality of the offered services, while a provider is apparently in the advantage of having all the requirements for them listed unambiguously in the document. So there is no point in thinking twice about drafting an additional contract in the contemporary business world.